Distributive Justice and Adam Smith (Istanbul Talk) I

Based on a presentation for a panel I convened on Adam Smith at the conference Pluralism and Conflict: Distributive Justice Beyond Rawls and Conflict, Fatih University, Istanbul, 6-8th June 2013.

There are two aspects to distributive justice in Smith, referring more to the underlying themes of his work rather than his explicit claims. One aspect is the manner in which states maintain themselves by bringing advantages to enough people for it not to encounter too much resistance to enjoy and orderly existence. The second aspect is more morally guided with regard to protecting the poorest from complete destitution and preserving the sense that justice is being applied to all. The first aspect might not seem like justice at all, because it is what people in power do in order to keep their status, and associated economic goods, rather than what anyone does for the sake of justice itself.

Smith himself was not, however, an advocate of a form of moral theory detached from other interests. Theory of Moral Sentiments gives psychological and social bases for moral rules and judgements, and though Smith strongly resisted the idea of an egotistical reduction of ethics, the criterion of satisfying the invisible spectator does not establish a sharp distinction between self-regarding acts and altruistic acts. Ethics on  a collective level grows and and improves over time. The idea of social and political justice emerging from state craft is in this case not a big jump from Smith’s explicit thoughts about justice. The second aspect flows from Smith‘s explicit thoughts about ethics and justice, though it does not give us a fully explicit theory.

 

The second aspect is developed in An Inquiry into the Nature and Causes of the Wealth of Nations, mostly with regard to distributive injustice. This itself has two aspects: injustice towards the poor and injustice between sectors of society. The first brings us closer to the more pure form of distributive justice questions, and the second closer to the state craft issues. In these threads in Wealth of Nations, the cause is largely the activity of the state rather than the results of markets being left free of state legislation and government schemes. Smith sees injustice as resulting from collaboration between merchants in the same sector, but sees this as more the consequence of state intervention than of free commerce. The state enabling, encouraging and even requiring enterprises to form corporate bodies (such as local chambers of commerce in Britain) in the same sector is the biggest reason for merchants conspiring against the public. That is the source of the famous quotation about merchants conspiring against the public, though that quotation is often used to support demands for increased state regulation. The great injustices that Smith mentions to the poor come in part from the way the Poor Law tends to tie the poor to their locality of birth, under suspicion that they might apply for public funds in a parish (minimal unit of local government in Britain) where they lack previous connections. There is a concern here with the suffering of the poor, but also with the negative consequences for the economy of restricting labour mobility (concern which can and should be applied now to migration between countries).

A related concern is that lingering requirements from the Middle Ages for seven years of apprenticeship, before practising a craft, limits the chances to the poor to improve their economic situation. The poor are less able to offer skills to make a good living if faced with an artificial seven year delay before putting their skills out on the market.  Again there is an interlacing of concern for the condition and rights of the poor, with the negative consequence for consumers in general and what we might now call the public good.

Another source of injustice to the poor is the application of taxes on the necessities of life, in which case the concern is more purely one for the condition of the poor. Smith’s favours taxing luxuries rather than necessities, but he nowhere calls for graduated (progressive) taxes, and only a tortuous interpretation of his work can support such an idea. Public debt results in a distributive injustice for Smith, the understanding of which includes the assumption that ‘natural liberty’ is a better basis for political economy than state interventions. Public debt leads to a forced transfer of income from the productive sectors of the economy to creditors, that is the financial sector of the economy. That includes a transfer (also noted by Hume) from tax payers of low income to rich holders of government bonds (a very relevant issue at present, though it tends to be egalitarians now who are less concerned with debt than conservatives and libertarians).The solution that Smith advocates is reducing debt, which includes reducing public expenditure, particularly on war, so again an approach different from most egalitarians at present, though on the specific issue of military spending there could be some agreement.

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